Proposal writing is indeed a process that involves setting funding priorities, researching potential funders, creating a basic proposal, tailoring the basic proposal to suit a specific funder’s expectations, and following up on any funder inquiries and responses.  Because the basic proposal is an essential part of the process, let’s spend a little time highlighting the key features of a basic proposal.  Generally, the flow of a proposal is as follows—Executive Summary –> Statement of Need –> Project Description –> Budget –> Organization Details and Information –> Conclusion.  The proposal should be free of typos and other errors.  It should be compelling, without being overstated; and it should be realistic.  Also, the basic proposal should be fairly standard and easily adaptable to various other formats and requirements.

The Executive Summary is the opening section of the proposal.  It is generally about a page in length and provides the reader with an overview of the rest of the proposal.  The Executive Summary briefly states the need, a proposed solution, funding requirements, and your organization’s capabilities.

The Statement of Need follows the Executive Summary and is usually 1-2 pages in length.  This section of the proposal expands on the need supposition previously introduced.  This is where you will want to paint a compelling picture for a potential funder; your arguments should be logically presented, factual, and relevant.  You should gather supporting information from sources like stakeholder interviews, government agency reports, and focus groups.

The Project Description introduces the details of the project and how it will address the need.  Key components of this section are an estimate of the projected outcomes, a description of the methods that will be used to achieve outcomes, a listing of staff requirements, an outline of assessment methods, and a sustainability plan.  Plan to spend 3-4 pages describing the proposed project.

The Budget is a description of the financial requirements of the project and should contain any required explanations of proposed expenses.  The Budget should be approximately 1-2 pages.

The Organization Details and Information section of the proposal is a general overview of your organization—the products and services it offers, its mission, how the proposed project aligns with the mission, and any other relevant information.  There is no need to overwhelm a prospective funder with information about your organization, so try to keep this section to 1-2 pages of key information that enhances the proposal’s prospects.

Finally, the Conclusion should be 1-2 paragraphs that restate the need and how your project will help solve the problem.

If you have any questions about proposal writing and how proposals can be used to further fundraising goals, please do not hesitate to contact me at info@cmesolve.com.   You may also find a more detailed treatment of proposal writing techniques in The Foundation Center’s Guide to Proposal Writing, Fifth Edition.

Reference:  Geever, Jane C.  The Foundation Center’s Guide to Proposal Writing, 5th ed.  New York: The Foundation Center, 2007.

If you have an interest in working together to form a nonprofit devoted to improving adult literacy in the United States, please submit a statement of interest to me at info@cmesolve.com by March 15^th.  The statement of interest should detail in 300-500 words the reasons why you would like to participate on the board of directors for an adult literacy program.  Also, please send along a resume with your statement of interest.

I look forward to reading statements from all the folks who are as passionate about adult literacy as I am.

In Part I, I discussed a number of BATNA Do’s and Don’ts—

• DO enter a negotiation knowing what your BATNA is.
• DO seek to improve your BATNA over time.
• DON’T reveal your BATNA too soon or ever, except if negotiations are stalled or you don’t mind accepting your BATNA over a more agreeable negotiated offer.

One more important Don’t is do not lie about your BATNA.  First and foremost, lying is unethical and immoral and will reflect on your ethical and moral values if uncovered.  Also, in a contractual setting, lying may be illegal and may result in a lawsuit or other criminal proceedings.  Besides, what if your bluff is called?

Now, with the Don’ts out of the way, let’s think a little more about other acceptable BATNA behaviors.  You should probably do some research to try to uncover more about your counterparty’s BATNA.  The more information you have about your counterparty’s BATNA, the better you will be able to plan your offers and counteroffers during the negotiation process.

You should also be prepared to signal, but not reveal, that you have a BATNA.  Times to signal your BATNA are

• If you are asked if you have a BATNA, go ahead and answer yes without revealing what it is.
• If you suspect that the counterparty is underestimating your negotiating potential, signal that you have a BATNA without revealing it.
• Also, signal your BATNA to correct misinformation and to defend against lowball offers and counteroffers.

Next, determine the monetary value of your BATNA.  This value is your reservation price during a negotiation.  Reservation prices are generally subjective and depend on such things as your risk tolerance, your values, your time commitments, etc.  Use your reservation price to direct you in an assessment of your BATNA’s tangible value.

This brings us to understanding that in every negotiation there is a zone of possible agreement, or ZOPA.  The ZOPA is the bargaining zone that bounds your reservation point and your counterparty’s.  Another way to define ZOPA is the range from the least amount the seller is willing to accept to the most the buyer is willing to pay.  It is likely that an agreement will be made somewhere within the ZOPA.

Beware that you do not accept the first offer that is better than your BATNA, because you may not be maximizing the ZOPA.  In order to avoid doing this, you should try envisioning your ideal offer and shoot for this aspiration point during your negotiation.  If you have an aspiration point in mind, it is unlikely that you will settle for the first offer above your BATNA.

Now that you have a few more skills in your negotiations toolbox, try using them during your next negotiation and see how far a little upfront planning will carry you in reaching beyond your BATNA to your ideal offer.

Once you’ve decided that borrowing makes sense to finance a purchase or expand your business, there are few things you should do before proceeding to secure the loan:

Determine how much you can afford to borrow.  Loans must be repaid over time along with interest so that the total repaid will be somewhat more than the amount borrowed.  Make sure you understand the schedule of loan payments as well as the full cost of the loan.  Be prepared to shop around for a loan with a rate and terms that best meet your needs.

Understand your credit score.  Your credit score will impact the total cost of your loan as lenders use this score to assess the amount of risk they will incur by lending to you.  The greater the chance of you defaulting on the loan, the more expensive the loan will be to you.  So, it is important to know your score and do all that you can to improve it prior to borrowing.  There are three primary credit reporting agencies:  Experian, TransUnion, and Equifax.  Be sure to check the report from each of these agencies in order to get the most comprehensive record of your credit history.  You can get a free credit report at www.annualcreditreport.com.

Know what lenders are looking for.  Responsible lenders are interested in your ability to repay your debt obligations.  They will want to be assured that you are responsible and will treat your loan commitment seriously.   Be prepared to provide a prospective lender with proof of stable employment and residence, with proof of income, and perhaps with a list of all your liabilities and assets.

Prioritize your needs and wants.  Determine if you are borrowing to finance something you need or something you want.  Give more consideration to those things you need and those that will yield a higher return on your investment.  Borrowing to secure something that has long-term value is a good debt strategy.

Pay attention to interest rates.  Avoid borrowing on high-interest credit cards.  Consider converting current high-interest debt obligations to lower-interest loans and credit instruments.

A final note on borrowing—a healthy amount of debt in your financial portfolio is a good way to manage your finances.  Don’t be afraid to use loans and other financing for the right purchases at the right times.  If you need help deciding if borrowing is right for you, don’t hesitate to ask a knowledgeable financial advisor.  Also, before making a major debt decision, consider contacting an agency like Consumer Credit Counseling for free or low-cost advising.  Once you understand the true cost of your debt decision, proceed with confidence that you are making the right decision to sustain and grow your business well into the future.

To uncover the true value of your products, begin by doing a little research…right, I know, who has time to do research?   I think that you do, and you will want to, especially when you remember that a percentage price increase is more valuable than the same percentage cost reduction when determining bottom-line profit.  So now that you are convinced that price matters more than just a little, there are a few aspects of your business that you will want to get to know better to help you better manage price and value—

Your competition:  who are your competitors?  How are their products different from yours?  What price are they charging?  Understanding the competition will help you know how to position your products to maximize revenue.

Your products:  what is the breadth and depth of your portfolio?  Do you offer product characteristics that your competitors don’t?  Are these characteristics valuable to your customers?  Can you eliminate part of the portfolio to focus on higher / lower margin products?

Your customers:  who are your customers?  Are they value-oriented, or are they willing to pay a little more for slightly better quality or a few more cosmetic features?  Can you differentiate your customer base so as to weed out the premium customers from base business?  Charging the premium customer more will enhance the value of your business for your sake and your customers’.

Your services: do you offer services that can be bundled to products to enhance attractiveness?  Can you guarantee quality or reliability?  Can you tie the guarantee to a warranty agreement?  Do your services enhance or detract from your product offerings?  You will want to align your products and services to increase value for your business.

Now that you understand your business and the market better, you should be able to gauge the true value of your products and services irrespective of the cost to produce them.  It is time to incorporate what you’ve learned during your research about your competitors, your customers, and your products and services into your marketing and sales schemes.  You’ve got something that’s better than the rest, so tell everyone about it and ask them to pay the right price for it, i.e. the price that allows you to realize the true value and potential of your overall business.

1. Bernstein, Jerry.  “The Secrets to Price-Setting.”  Business Week Online.  6 November 2006.

Cycle counting programs are designed to eliminate or reduce unplanned stock outs.  They increase inventory accuracy, improve resource efficiency, and eliminate the need for periodic physical inventory audits.  Also, improved inventory accuracy allows for improving service levels while reducing safety stock levels, resulting in a reduction in overall inventory costs.  Other benefits of cycle counting are

• Improvements in inventory control procedures and processes,
• More timely corrective actions for inventory discrepancies,
• Enhanced compliance reporting and auditing performance, and
• Increased customer service response times.

When determining cycle count frequency, there are several key factors that should be considered.  You should begin by assessing what needs to be counted and how often.  You should consider the minimum number of counts for each stock keeping unit (SKU) that would satisfy the accountants and auditors.  Are there other governing bodies that require a minimum count frequency?  Other factors that will determine count frequency are

• Inventory turnover rates: high turnover SKUs should be counted more frequently,
• SKU volume: high volume items require a higher count frequency, and
• High shrinkage items: SKUs that are likely to be stolen or misplaced should be counted more often.

When developing a cycle counting program, you should take the following steps into consideration:

• Training and documentation of procedures,
• Support system requirements,
• Change management program implementation, and
• Establishing an inventory control group to execute and monitor the cycle counting program.

The inventory control group should be run by an inventory control manager who oversees the inventory control staff and approves any required inventory adjustments.  The inventory control staff is made up of individuals who perform cycle counts, zero count confirmations, slot verifications and SKU verifications.  Cycle counts are scheduled counts that are completed on a routine basis.  Zero count confirmations are performed ad hoc during normal day-to-day warehousing operations.  And slot and SKU verifications occur whenever a discrepancy is uncovered and needs further investigation.

Counting activities should be performed during minimal activity periods in the areas where the count is being conducted.  Counting during slow periods reduces the risk of counting errors and ensures greater count accuracy and reduced slot/SKU verifications.

Because inventory impacts every area of business operations, it’s important that inventory accuracy be maintained at a high level.  Implementing a cycle counting program will enable you to establish inventory control procedures that ensure effective and efficient inventory management and control.

If you and your competitors offer the same product or service and the only differentiating factor is price, it is only a matter of time before competition drives prices lower and lower, essentially down to pennies above what it costs you to produce the good or service.  The best way to avoid a price war such as this is to differentiate what you’re selling from what your competition is selling in a way that encourages your customers to choose your product or service over your competitors’.

One way to differentiate your product or service from that of the competition is to develop and communicate a unique selling proposition or USP.  A USP is an offer or promise to the customer that cannot or will not be matched by your competitors.  For example, M&M’s USP is “melts in your mouth, not in your hands.”  This USP is concise and compelling and unique to M&M candies.  This is a great example of an effective unique selling proposition.

In developing USPs for your products and services, get to know your customers and competitors well.  Do your competitors make any promises?  Do their products and services have unique benefits or glaring weaknesses?  What benefits are your customers willing to pay more for?  Also, be aware of benefits that your company can claim due to geographic location, customer segmentation, or attribute differentiation.  Write the answers to these questions down.  Use this exercise to help you focus on developing a selling proposition that attracts new customers and convinces existing customers to continue to do business with you, perhaps even at a premium price.

Use the following worksheet, presented in Andrew Gregson’s Pricing Strategies for Small Businesses (International Self-Counsel Press Ltd, 2008) to help organize your notes and lead you to the most effective USP:

Once you have created a USP for the goods and services that you offer, use it to position what you offer in a way that best promotes the attributes and benefits of your company over your competition.

Let’s start with what BATNA is—a BATNA is the Best Alternative to Negotiating an Agreement and is the course of action you would take if you were to decide not to accept the terms of a negotiation.  For example, if you are negotiating with your child for better grades and the child agrees to study more if you buy her a car, then your BATNA might be to accept whatever grades she gets without the promise of a car.

Although it’s nice to have favorable BATNAs, a BATNA does not have to be one that you like.  For example, if you are deciding whether or not to accept a job promotion that would require you to relocate your family, your BATNA might be to remain in your current position and forego the promotion.   In this situation, you may have an opportunity to improve your BATNA by negotiating for the same responsibilities in the current location, perhaps without an increase in salary or with fewer direct reports.  Think of your BATNA as a living entity that is capable of growing or declining, depending on the amount of attention that you give it.  Neglect your BATNA, and surely it will not be the best it can be.  Nurture it, and it becomes a powerful tool in any negotiation.

Because your BATNA is such a powerful ally, do not reveal it too soon or at all during a negotiation.  Only if your BATNA is so good you wouldn’t mind accepting it over any negotiated outcome should you reveal it to your counterpart in the negotiation.  In this case, you are probably only expecting to improve the agreed upon terms marginally over your BATNA.  Also, you may consider revealing your BATNA as a last resort in the negotiation: negotiations are stalled and you’ve got nothing to lose by revealing your BATNA, then by all means let the other party know that you are going to settle for your BATNA.

As 2010 begins to unfold, take a closer look at the negotiation strategies and techniques that you use in your personal and professional lives.  If you are not using your BATNAs to their fullest, then stop and assess how knowing your BATNA and how assessing and improve the strength of your BATNA can improve the outcomes of all your negotiations.

This is part I of a multi-part series on BATNAs.  So, stay tuned for more on how to use BATNAs to improve your position in any negotiation.

Looking ahead to 2010, I am planning an equally busy, productive year.  I’d like to focus on developing the blog—From Us to You, building a client base, securing funding for business expansion, and collaborating with other business owners on special projects. 

Next year, From Us to You will center on two main blog topics: pricing strategies for small businesses and negotiation tactics.  Skilled pricing and negotiation have a tremendous impact on profitability and sustainability of businesses.  Readers of From Us to You should come away with a better understanding of pricing and negotiation, why they are important, and how to manipulate each one to gain advantage.  I am excited about writing and researching blog entries in 2010.

The rest of 2010 will be devoted to marketing and promotion, protecting intellectual property rights, further strategic branding and growth execution, and having fun with analytics.  I look forward to doing more of what I started this year in 2010 and beyond. 

Please join me on From Us to You from time to time to comment on the various topics.  I hope to learn as much from you all as I do from preparing and posting the series of blog topics on pricing strategies and negotiation tactics.

Best wishes to you all in the coming year,

Tamboura Gaskins

Founder of Creative Management Enterprises

First, you may consider shortening replenishment lead times.  With shorter lead times, there is less variability in expected demand and, therefore, less risk of stocking out during the replenishment cycle. 

Next, review the frequency of your replenishments.  Increasing the number of orders placed will effectively reduce the amount of inventory required on hand. 

Lastly, consider improving your forecasting methods; smaller MAPEs (mean absolute percentage errors) require less safety stock coverage.

Try these few techniques to manage better both stockout costs and inventory holding costs.